A Former Deputy Bank of Ghana Governor, Emmanuel Asiedu – Mante has warned, the cedi risks depreciating massively if government does not check its expenditure.
According to him, the cedi can only stabilize if government fiscal consolidation holds.
[contextly_sidebar id=”KeHSy8ctcIbZI5OjAq2LQCIDO8YN6gJJ”]Some currency analysts are predicting the cedi will depreciate further in the first quarter of 2016 as a result of government’s inability to sustain its efforts aimed at correcting the drop in the value of the currency.
According to the Bank of Ghana as at December 2015, the cedi depreciated by 15.7% against the dollar.
In an interview with Citi Business News, Emmanuel Asiedu-Mante said, it will be difficult for government not to over spend its revenue especially this year being an election year.
“If government’s spending will hold, it is a big thing, this is an election year and there is the tendency to overspend, if fiscal policy will hold then the cedi will also stabilize but if government goes about spending more than its able to mobilize by way of tax revenue, then we are going to have a problem,” He noted.
Commenting on how the IMF’s recommendation on tight fiscal policies will impact on the cedi’s performance, the Former Deputy Governor said,
“That was in reference to fiscal policy that the consolidation is holding, in other words government is not overspending and if that situation continues till the end of the first quarter, then probably we will be getting somewhere but if that fiscal consolidation doesn’t hold and government overspends then we are going to be in trouble.”
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By: Norvan Acquah-Hayford/citifmonline.com/Ghana